SINGAPORE: Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) slipped on Tuesday, but traders expect the market to remain tight in the near term.

The front-month VLSFO crack dipped to $15.01 per barrel against Dubai crude during the Asian trading hours, compared with $15.39 per barrel a day earlier.

“Global fuel oil markets should remain tight as bunkering demand stays robust at the start of the year, while oil-fired power generation in Northeast Asia is expected to peak during January and February 2022,” consultancy Energy Aspects said in note.

“Steep prompt backwardation in Singapore VLSFO spreads could face near-term downside from higher arrivals to the Singapore Straits in the next weeks, but arrivals to the east of Suez in the second half of Q1 22 may lighten.”

The front-month VLSFO time spread narrowed its backwardation on Tuesday to trade at $15.75 a tonne on Tuesday, compared with $16.25 a tonne on Monday.

Cash premiums for Asia’s 0.5% VLSFO fell to $16.15 a tonne to Singapore quotes, down from $16.66 per tonne a day earlier.

Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) dropped to $1.35 per tonne to Singapore quotes, compared with $2.26 a tonne in the previous session.

New Zealand delayed the planned reopening of its international border as Omicron infections are multiplying rapidly across Europe, the United States and Asia.